Trade Union Bill

Baroness Prosser Excerpts

Thursday 25th February 2016 Lords Chamber

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[Baroness Prosser]

97A: After Clause 14, insert the following new Clause—
“Codes of practice: employee engagement
In section 203 of the 1992 Act (issue of Codes of Practice by the Secretary of State), after subsection (1) insert—“The Codes of Practice issued by the Secretary of State for the purpose of promoting the improvement of industrial relations must encourage all employers, in both the private and public sectors, to establish mechanisms via trade unions that encourage and enable effective employee engagement in industrial relations.””

[Baroness Prosser (Lab)]

My Lords, I am pleased to speak to the amendment because it is about the only part of the Bill that strikes a truly positive note. The Bill itself is entirely negative, and the other amendments—those we have heard already and those yet to come—are designed as a damage-limitation exercise to stop the Government making a complete hash of industrial relations and complete fools of themselves.

As a trade union organiser over many years, I met many ordinary workers who had great ideas about ways to improve work processes or systems. Even the humble road sweeper—in the days when we had them—could make suggestions about bettering route arrangements, for example. I will not, however, rely simply on anecdotal points; there is ample evidence regarding the link between employee engagement and morale, and employee engagement and productivity.

The Involvement and Participation Association, in which I declare an interest as a board director, has recently produced a report entitled Involvement and Productivity—the Missing Piece of the Puzzle?, in which it looks at the influence on productivity in workplaces that have good levels of employee engagement. This is not small beer. We in this country have a very poor record on productivity. We are 17% less productive than the rest of the G7, while the average worker in France and Germany produces more in four days than does the average worker in the UK in five. The report examines evidence from large surveys, behavioural experiments, academic studies and employers themselves, and shows that when employees have a voice in the decision-making process over their jobs and the wider organisation, productivity is higher.

The report also looks at how employees feel about involvement in their workplaces. Just one in three workers felt that managers allowed them to influence, or have a say in, decisions, and employers in the UK are less likely than global competitors to encourage workplace involvement. In many EU countries, for example, solid trade union agreements run alongside works councils. Matters are not helped in the UK by the decline in collective bargaining and the fact that mechanisms for employee voices to be heard are few and far between.

A concrete example of a successful exercise may help to persuade Ministers of the sense of this case. For many years, Royal Mail was renowned for its poor industrial relations. From my six years of experience as a non-executive director of the Royal Mail holdings board, I can say categorically that the problem lay with both management and the union, neither of which for a very long time had any knowledge or experience of workplaces outside Royal Mail. However, a programme was introduced under the then chairmanship of Allan Leighton entitled Great Place to Work. This involved various strands, such as First Line Fix, which enabled local managers to take decisions about local issues, rather than having to send everything to national level for a decision.

For example, when a local clothes dryer broke down and was not repaired for months—meaning that posties had no means of drying their soaked uniforms—it made everyone very fed up and resentful of the company. What was the matter with it? First Line Fix got the dryer mended within a week.

A Great Place to Work also involved work-time listening and learning sessions, discussing ideas from all in a section about ways in which things could work better—ordinary employees advising managers on improving workplace systems. Listening and learning has continued and was felt to be extremely important during the difficult period of privatisation of the company. Engagement scores have improved significantly even through the privatisation process.

Employee engagement is about not only productivity but morale. How do any of us feel if we have no control over what goes on in our lives? Does what we think have no value? Can we be engaged in a process or a subject matter over years and years and still have nothing to say about it? It does not make sense, for either the morale of the worker or the future of the employment, be that big or small.

The world of work is made up of workers and employers—managers. But there is no mention of managers in the Bill. How are we to develop and grow and compete in the wider world when we pay so little attention to the role of the manager? Quite often, even senior managers pay no attention to the behaviour, training, ability—or whatever—of their junior managers. According to the Chartered Management Institute, only 13% of managers in this country have any management training. That is shocking. Here we are, spending our time arguing about problems with trade unions that mostly do not even exist.

Finally, I ask the Minister not to cite the Government’s view of red tape and their dislike of it. Please do not say that the Government cannot be doing with the nanny state, because everything about the Bill is about unwanted red tape by the mile and the Government poking into areas about which they are shamefully ignorant and where neither workers nor employers want them to.

[Lord Young of Norwood Green (Lab)]

My Lords, I congratulate my noble friend Lady Prosser on her amendment. I can pay her no higher compliment than I wish I had thought of it myself. I was a junior Minister in the previous Labour Government, who supported the concept of employee engagement. As I understand it, the present Government continue to support that concept. The amendment gives the Government an opportunity to put something positive into the Bill that is direly needed.

As it stands, the Bill is really a lost opportunity. It does not address the real problems facing British industry: low productivity, which has already been referred to by my noble friend; skill shortages; and a lack of management training, which she also referred to. There are so many examples of the value of constructive engagement between employers and employees involving trade unions. Unionlearn was referred to in a previous debate. Health and safety was given a thorough airing on a previous day in Committee. There are examples of where industries have been in serious trouble, as the automotive industry was, where the trade union movement has shown itself more than capable of being involved in very constructive engagement. My noble friend referred to Royal Mail. I could give your Lordships numerous examples from British Telecom, where I was involved. I declare my interest as a lifelong trade unionist. Unions can make a really positive contribution to government policy.

I will quote a couple of examples that do not involve trade unions because we know that there are plenty of workplaces where they are not involved. There was an article in the Evening Standard on 11 September last year about Sacha Romanovitch. It said:

“Sacha Romanovitch is a breath of fresh air. It’s not only that she’s the first female boss of a major City accountancy firm”,

it is the things that she has introduced. It continues:

“The new chief executive of Grant Thornton, in effect their senior partner … has already announced a John Lewis-style profit sharing scheme and a cap on her own salary. Her pay will be limited to 20 times the firm’s average salary—compared with the average FTSE 100 chief executive on 149 times”—

whether they are all worth it is a moot point. The article goes on to say that,

“profits will be shared among all 4500 staff instead of the most senior, and the profit share will come from boosted profits generated by more collaborative working”.

I stress that last phrase because that shows the benefit of it.

Another example, which I saw in the Times in April last year, is a company called Gripple, which makes agricultural wire joiners in Sheffield. It is an interesting company. According to the article,

“it employs 500 people and has a turnover of more than £50 million. Hugh Facey, the entrepreneur behind the business, is as original as his invention. He doesn’t run the business to make money for himself, he claims”—

I have not had a chance to check that out but I will give him the benefit of the doubt for the rest of the things he does—

“but to provide jobs to local workers”.

Goodness knows we need that in British industry. The article continues:

“Rewards are shared throughout the company, because every employee has to own shares in the business, giving them a collective stake of 36 per cent—and a say in how it is run”.

It is that last point that I want to emphasise: another good example of employee engagement.

Some of the Government’s policies are right. I am with them on their approach to apprenticeships. We might argue about the detail but their drive to increase the number of apprenticeships is a very worthy objective. It would be much easier if, instead of discussing this Bill, we had a Bill that talked about involving trade unions in that campaign to increase the number of apprenticeships, which is why I talk about a lost opportunity.

I cannot help reflecting on my experience of negotiating with senior management in BT—and this applies to many companies throughout the UK—and their love of employing external consultants. They would think nothing of employing McKinsey for a few million pounds. I said to them on many occasions, “I am not going to tell you that you should not do it—I know you won’t take any notice—but while you are doing that it just might occur to you that you have about 140,000 consultants, and you are paying them anyway. If anybody can tell you what’s wrong with various parts of the company and how to improve productivity and profits, it is your employees. You ought to start listening to them far more than you do at the moment”, and I gave them many practical examples. My noble friend Lady Prosser pointed out a significant fact in British industry: the level of management training is really abysmal. We still have a long way to go on that. The need for employee engagement is paramount.

I am sure that we will have some comments from the Minister about the wording of the amendment. I do not think that my noble friend Lady Prosser or I say that everything is perfect. The amendment has been pitched at the fact that this is a Trade Union Bill and we know that there are significant areas of interest where trade unions are not involved. The core principle of the amendment is valid. It says:

“The Codes of Practice issued by the Secretary of State for the purpose of promoting the improvement of industrial relations must encourage all employers”—

I stress “encourage”—

“in both the private and public sectors, to establish mechanisms via trade unions that encourage and enable effective employee engagement in industrial relations”.

There is a real opportunity for the Minister to prove that the Government are in fact in listening mode and to inject something positive into the Bill.

I will end on a quote. I cannot match the intellectual capacity of my noble friend who quoted Chekhov—or at least, I could not find a quote that was apposite—but I thought this one would do. It comes from a song written by a couple of my favourites, Harold Arlen and Johnny Mercer:

“You’ve got to accentuate the positive

Eliminate the negative”.

That is my advice to the Minister and I look forward to her response.

--- Later in debate ---

[The Earl of Courtown (Con)]

My Lords, I thank the noble Baroness, Lady Prosser, as well as my noble friend, for giving me the opportunity to respond to this fascinating debate covering many different aspects of the great relationship.

The Government recognise the positive role that trade unions can play in the workplace. In a debate last November brought by the noble Lord, Lord Foulkes, the House debated that positive role. During that debate, the noble Baroness, Lady Prosser, highlighted from her personal experience some of the important contributions that trade unions can make. Having read the debate and looked carefully at what she said, in the last paragraph of her speech, she mentioned the partnership between workforce and management and how important it was that that worked efficiently for all concerned. I could not agree more.

My experience in this field, apart from a brief period in the 1970s when I was working on the shop floor in an engineering firm in the West Midlands—which was an interesting experience for someone from my background—was up until 2010, when I was a contract manager in the construction industry. I worked for an SME, the backbone of the British economy. We employed 25 to 30 people. I was involved in sending people out to work, finding them work and such like. It was so important that those relationships worked and that there was the engagement mentioned by many noble Lords. It was a non-unionised workforce, but it still worked very well, whether on health and safety or training, but then we were a committed organisation. We worked well with the workforce and it was mutually beneficial.

The noble Lords, Lord Stoneham and Lord Brooke, talked about the importance of employee engagement. I recognise that, and we know that businesses understand it too. The CBI 2015 employment trends survey highlighted that the top priorities for businesses in the coming year are better leadership and employee engagement to foster productive workforces. The noble Lord, Lord Brooke, also referred to information and consultation regulations and said that employees are voiceless in some organisations. Under the information and consultation regulations, employees have a right to request a formal workplace agreement for engagement. That does not apply to workplaces of less than 50 employees—the sort of organisation I was involved with—but employees have greater influences in those workplaces anyway. Also, as we have heard, many employers involve employees in decision-making processes because it makes good business sense.

We have acknowledged that unions can play an important role in the workplace and have heard many examples in many debates in your Lordships’ House. However, productivity, which was mentioned by the noble Baronesses, Lady Prosser and Lady Donaghy, is not influenced solely by the presence of unions, but by capital investment, innovation and dynamism of markets—they all have potential to increase productivity, given current record high employment levels. Data from the OECD do not directly indicate a link between trade union density and productivity, but I realise that there are different figures from a wide range of sources. We are very conscious that productivity has to rise, and we are doing a great deal in this area, which I will not go into at present. We also understand the importance of a well-motivated workforce.

The noble Lord, Lord Young of Norwood Green, mentioned apprenticeships, as I suspected he might. The Government accept that apprenticeships and training are key to improving productivity, which is why we are committed to the 3 million apprenticeship starts in England over this Parliament and to making sure that they are of the highest quality possible. We know that the trade union movement will play its part in helping us to deliver this commitment. For example, last year the TUC and the CBI signed a joint commitment to support and promote apprenticeships and traineeships for young people.

It is not right that we restrict how employee engagement can happen. The current approach is flexible and means that businesses have a variety of ways in which to engage with and involve their employers in their businesses. Currently, employers and employees can decide the best mechanisms for engagement and tailor this to address individual workplace needs. This may or may not involve representation through a trade union. The choice for individuals to join or not join a trade union is important. Many workplaces and sectors are not as heavily unionised, and alternative or additional methods have been created for engaging with employers effectively. Therefore, we do not believe that we should restrict the type of engagement that we promote. I do not believe that this amendment will improve industrial relations or employee engagement. But we will take careful note of what has been said.

[Baroness Prosser]

I thank the Minister for giving way. I am not sure that I made it clear in my speech that employee engagement is conducted in workplaces that are unionised and in those that are not unionised. It is not something that sits separately from trade unionism or can only sit alongside trade unionism; it works in companies where there are good union relations but insufficient attention is paid to ways in which employees can participate and contribute to a debate and in places where there are no mechanisms for engagement. So it is not one or t’other; it goes across both kinds of workplaces.

[The Earl of Courtown]

I thank the noble Baroness for that intervention. I shall read carefully what she said. Having taken all that into account, I ask her to withdraw her amendment.

--- Later in debate ---

[The Earl of Courtown]

I am always willing to listen and to hold a meeting.

[Baroness Prosser]

I beg leave to withdraw the amendment.

Amendment 97A withdrawn.